The "Soaker" Campaign

The story might begin, "A long time ago, back in the third quarter of 2008, a site that looked like a blog appeared." Since then, i.e., in less than a year, the fake blog and its relatives - the fake news site and fake celebrity/gossip site - have taken over the web. Whether as a text ad placement through one of the self-service networks or as an ad on display, you can hardly navigate the web without running into an example of fakevertising.

Years ago, in a similar media environment, a similar phenomenon happened, where users could go to almost any site and be assured of seeing the same type of ad running - those for mortgage refinance. Ad networks call these campaigns "soakers," because like a sponge they are what show when no other good (i.e. premium) ads exist. If you've seen an ad for Classmates, or remember Colonize and the Bonzi Buddy, you've seen a soaker campaign.

Regarding mortgage ads and fakevertising, neither of these soakers were obvious candidates for success, but once each showed signs of sticking, companies came out of the digital woodworks to profit from the trend. Given the permeance of the fakevertised sites, the question that keeps running through my mind is whether they are the new mortgage. The answer is somewhat yes and somewhat no. Ultimately, I'd say no, and here is my thinking.

What they having in common

• Run of Network - Like late night infomercials or performance-based television ads, the economics of the campaingns might be good but not good enough to (on the whole) pay for premium placement. For example, both campaigns have a certain target or at least a certain demographic more likely to convert than others. Yet, because both of their demographics make up such a large percentage of web surfers, trying to target them would make them unprofitable. So, they are best off running (generally) untargeted. Classmates, netflix, and other broad consumer acquisition offerings work the same way.
• An Acquired Taste - People, be it site owners and/or publishers either love the ads or hate them. For them to succeed, the ads must grab the user's attention. NexTag and LowerMyBills had a competition it seemed for who could create the most irreverent ads with an entire genre of creatives being born, the stretched dancing mammal. The goal, though, wasn't irreverence; it was clicks; and while a bouncing stalk of corn has little to do with refinance, given the good chances that someone who clicks could convert (again back to the run of network, shotgun approach), they just wanted to get people to notice. The same applies with the fakevertisers whose ads have started to evolve from just before and after pictures to rather interesting
• Buyer Network - Fakevertising works because it takes only a handful of companies to provide national coverage. You don't need a different partner if you want to advertise to women in Georgia versus New Jersey. The only real question is which of the acai, ResV, colon, etc. will convert the best. Mortgage in its prime, offered the same and is what allowed so many to enter. All it took was a direct relationship with a handful of top buyers for that to translate into almost any lead generated being sold (even multiple times).
• Screwing The User - Both mortgage and fakevertisers results impact people's monthly payments. While you could argue that mortgage refinance ads didn't set out to screw the user, they brought with them a likelihood for abuse (now more than obvious), with people entering into something they don't fully understand.

Where they differ

• Role of Aggregator - With any industry, the ecosystem has many players and moving pieces. It is certainly the same with these two. Mortgage has lead buyers and sellers. Sometimes the buyers advertise for their own product, sometimes just buying leads. Some sellers don't sell to any lender directly, and so on. The majority of the lead business though had lenders working with aggregators like LowerMyBills. The aggregators didn't just manage the sales, but they also generated most of their leads organically (through their own means not affiliates). Not so with fakevertising. The aggregatos here are the cpa networks that sit in between the affiliate generating traffic and the pill marketer. The pill makers hardly advertises directly and neither does the cpa network.
• Affiliates vs. Companies - A look at who is buying the traffic shows that in the fakevertising world, it's an affiliate driven mode (with the exception of CPX Interactive who runs their own fakeads as an internal, house campaign.) Mortgage was very different. There were affiliates, but the big players were specialized companies, like LowerMyBills. NexTag played in more than mortgage, but they had an entire business unit that in size of operations and revenue topped many of the cpa networks. Another way of saying it is that people can make money on fakevertising, but they are anything except a real company. LowerMyBills might not have wanted visitors, but you could find them.
• Lower Tech - Fakevertising isn't devoid of technology, but you will hardly find any proprietary technology involved or needed. It's differentiated only in the affiliates ability to design, buy, and convert, all of which matter greatly and take immense risk and skill... just not technology. Compare that to a mortgage aggregator who had to build complex lead routing platforms, reporting, and optimization. True, in mortgage's peak, you could be a one or two man affiliate but not at the same scale and as competitive with the specialists.
• Screwing The User - Unfortunately, there are no shortage of cases with users not being happy with the outcome or either their mortgage or the no longer free trial. Where you could argue a difference is in the number of true success stories. You just won't find them with fakevertising.
• No Exit - A number of people are making great money from the fakevertising ecosystem, but no one will make the kind of money that the founders of NexTag did when they successfully raised multiple rounds of capital because they could or when they sold the company at a billion dollar plus valuation. LowerMyBills too had a highly successful exit, and while cynics might point out how the market for mortgage has since changed and some frothiness might be involved, the same will not happen in the fakevertising space.
• Sales as Differentiator - Also a result of the fakevertising being an affiliate driven model versus a specialist (company driven one), sales matter but the relationships aren't exclusive. The cpa networks who deal with the continuity programs want all of their best affiliates to excel. There are a handful of vertically integrated operators, but they don't represent a large percentage of the total dollars, which was not the case in mortgage. There, the companies like LowerMyBills comprised most of the online dollars, and a key to their success was the backend-buyer network. The same holds true with lead generation for areas like insurance. The depth of its buyer network becomes a big advantage.
• Macroeconomics vs. Micro - Last and definitely not least, both fakevertising and mortgage have/had the right economics to succeed in a market where inventory abounds at affordable prices, but one was the result of a global trend versus an relatively arbitrary concoction that just happened to work. The products the flogs promote have been around for quite some time, they just needed the right packaging to make them work. And, while the flogs may bring down performance marketing, they aren't part of a trend that could bring down the economy.

 

Comments

[Kwandom]

I do miss the dancing snowmen. Makes me want to refinance my mortgage at the lowest rate in history.

Quality posts Jay. Keep them coming!

[Sam]

Another amazing post. Jay you are really a great writer.